June 22 (Bloomberg) -- Indian equities retreated for the
first time in four days as the rupee fell to a record, and after
reports showed the U.S. economic recovery is slowing.

Reliance Industries Ltd., operator of the world’s largest
refining complex, fell to a two-week low. Hindalco Industries
Ltd., the aluminum maker that controls U.S.-based Novelis Inc.,
dropped the most in five weeks. The BSE India Sensitive Index
lost 0.4 percent to 16,972.51 at close, paring the weekly gain
to 0.1 percent.

India’s rupee touched an all-time low and is headed for its
worst week since September, fanning concern the government will
fail to curb the fastest inflation and pare the widest fiscal
deficit among the largest emerging economies. Offshore funds
sold $78.4 million more domestic shares than they bought this
week through June 21, data from the regulator show. The Sensex
has dropped 8 percent from its Feb. 21 high.

“The economy is going to struggle over the next six to
nine months because growth and the deficits are a concern as the
rupee continues to weaken,” Jyotivardhan Jaipuria, head of
India research at Bank of America Corp., said in an interview to
Bloomberg UTV today. “Rupee depreciation is not something you
want if you are a foreign investor because it reduces your
return in a market where returns are difficult to come by.”

The currency fell 1.5 percent and touched an unprecedented
57.3275 per dollar, extending this week’s loss to 3 percent, the
most since the five days ended Sept. 23. India’s rupee and
Thailand’s baht led other Asian currencies lower as signs the
world economy is slowing dented outlook for regional exports.

U.S. Growth

A Fed Bank of Philadelphia index signaled yesterday the
worst contraction in manufacturing in almost a year, while
existing U.S. home sales fell more than forecast and jobless
claims beat estimates. The Federal Reserve lowered its 2012 U.S.
growth forecast this week to a range of 1.9 percent to 2.4
percent, and extended stimulus known as Operation Twist.

Standard & Poor’s and Fitch Ratings said this month India
is at risk of losing its investment-grade rating if the
government fails to mend its finances.

India may have to sacrifice growth to rein in inflation,
Reserve Bank of India Duvvuri Subbarao said on June 19, a day
after unexpectedly leaving rates unchanged. Inflation of 7.5
percent is “above our tolerance level” and consumer-price
inflation is “disturbing” at more than 10 percent, he said.

Curbing the fiscal deficit and the success of the monsoon
are key to cooling prices, Subbarao said. India’s monsoon rain,
which accounts for more than 70 percent of annual showers, was
24 percent below a 50-year average since June 1, the state-run
weather office said yesterday.

VIX Climbs

The S&P CNX Nifty Index on the National Stock Exchange
decreased 0.4 percent to 5,146.05 and its June futures settled
at 5,151.15. India VIX, a gauge of options prices in the Nifty,
jumped 3.2 percent to 20.58, its first advance in six days. The
BSE-200 Index retreated 0.3 percent to 2,082.68. Combined
trading volume on India’s top two exchanges was 749 million
shares yesterday, 17 percent less than the 12-month daily
average of 904 million.

Reliance fell 1.1 percent to 711 rupees, its lowest close
since June 5. Hindalco dropped 3.3 percent to 117.3 rupees. The
stock was the worst performer on the 30-member Sensex this week
with a 5 percent drop.

ACC Ltd., the nation’s biggest cement maker and a unit of
Holcim Ltd., paced losses among its peers after the Competition
Commission of India imposed a penalty of 0.5 times profit for
the year 2009-10 and 2010-11. The share tumbled 3.1 percent to
1,215.05 rupees. Ambuja Cements Ltd., another unit of Holcim,
fell 2.9 percent to 167.05 rupees.

Earnings at the two companies will probably be the worst
hit in 2013, Nomura Holdings Inc. analyst Aatash Shah said in a
note today. The companies will pursue “all available legal
steps to defend their respective position,” Holcim said by e-mail yesterday.